Enda Kenny (Mayo, Fine Gael)
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Question 254: To ask the Minister for Enterprise, Trade and Employment his views on the impact of the change in State aid rules to be introduced by the EU from 2007 for businesses within the greater Dublin area and south eastern region; if he is considering additional measures to assist companies adopt to this change; and if he will make a statement on the matter. [21586/06]

Enda Kenny (Mayo, Fine Gael)
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Question 255: To ask the Minister for Enterprise, Trade and Employment the reason in terms of proposed changes to EU State Aid Rules regulating assistance given to start-up enterprises, the counties of Wexford, Waterford, Kilkenny, Carlow and Tipperary South have been selected to be included in the regulations which will apply to counties in the Border Midland Western region; the person who has responsibility for making this geographical designation; the criteria which were used to decide this issue; and if he will make a statement on the matter. [21587/06]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 254 and 255 together.

On 21 December 2005, the European Commission adopted new Regional Aid Guidelines for 2007-2013. The Regional Aid Guidelines govern the areas in which Member States may grant regional aid, more commonly known as investment aid. Investment aid is intended to promote the economic development of certain disadvantaged areas within the European Union in order to redress regional disparities. The Guidelines specify rules for the selection of regions which are eligible for regional aid and define the maximum permitted levels of this aid. In line with EU cohesion policy and European Council requests for less and better targeted state aid, the new Guidelines re-focus regional aid on the most deprived regions of the enlarged Union.

Under Ireland's current Regional Aid Map, which defines the areas where regional aid may be granted until the end of 2006, all parts of the country currently qualify for some level of aid. Given Ireland's economic performance since the current Regional Aid Map was approved by the European Commission in 1999, it was to be expected that our scope to designate areas for regional aid for 2007-2013 would be significantly reduced. Nevertheless, Ireland has secured entitlement under the new Guidelines to maintain regional aid qualification for areas accounting for 50% of the country's population for the period 2007-2013.

In accordance with the Guidelines, the Border Midlands and West Region (26.5% of national population) will be classified as an "economic development region" and will continue to qualify for regional aid throughout 2007-2013 on a phasing-out basis. Ireland will be permitted to designate a further 23.5% of population to qualify for regional aid for 2007-2013. The South East sub-region (Wexford, Waterford, Kilkenny, Carlow and Tipperary South) alone automatically qualifies for designation on the basis of unemployment criteria specified in the Guidelines, i.e. sub-regions with unemployment higher than 115% of the national average.

The remaining areas which may qualify for designation for 2007-2013 within the permitted population threshold must meet the strict requirement in the Guidelines that they are relatively more in need of economic development than other areas on the basis of recognised economic indicators. These areas will be entitled to regional aid for small and medium-sized enterprises (SMEs) only. The Southern & Eastern Regional Assembly was consulted by my Department in relation to this designation. The Assembly accepted the findings of an independent report which it commissioned, from the National Institute for Spatial and Regional Analysis, at NUI Maynooth, and proposed that the remaining areas to be designated for 2007-2013 should be Clare, Limerick, North Tipperary and Kerry. The Assembly also proposed that these areas, in addition to Cork, should, in line with the Guidelines, be designated for a transitional period of two years (2007-2008) during which they can also receive State aid for large firms. To ensure that the most deserving regions are designated in line with the Guidelines, Member States have to submit their proposals for designation to the European Commission for approval. The Government recently approved the Assembly's proposals, which Ireland will shortly notify to the European Commission. Details of the Regional Aid Map for 2007-2013 will be published following approval by the Commission.

In practice, therefore, all parts of Ireland, with the exception of Dublin and the Mid-East Region, will be proposed for designation in new Regional Aid Map, with varying aid rates related to their level of economic development. The regional aid rates currently available in Dublin and the Mid East are already lower than those in all other regions of Ireland. As Dublin and the Mid East continue to enjoy a more favourable economic situation, they cannot qualify for designation, within the permitted population threshold, ahead of other regions.

Any area no longer entitled to regional aid, such as the greater Dublin area, will continue to qualify for other forms of State aid, including SME Aid, Aid for Research and Development, Training Aid, Employment Aid and Aid for Environmental Protection, which are available in all areas. The greater Dublin area has now attained sufficient critical mass in terms of population, its skills base, infrastructure, enterprise base and economic activity that it can attract and sustain large business investment independent of grant support.